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Social Finance WorkshopMichael Lewkowitz
Karim HarjiAndrew Dilts
Why?
Growth is Great!
This biggering is buggering
us!
We’ve got issues
• Aging population
• Environmental degredation
• Resource depletion
• Economic and systemic collapse
Why Money?
“Money plays the largest part in
determining the course of history."
- Karl Marx
CAUSEWAY: a national collaboration
“Money is only a tool. It will take you wherever you wish, but it will not
replace you as the driver.”
- Ayn Rand
"Money.
It's a gas."
- Pink Floyd
Social Finance
Source:
Aquilla
n Inve
stmen
ts
SOCIAL FINANCE
Includes intermediaries, funds, mechanisms... and the marketplace that makes it work.
CommercialDebtGrants
Infr
astr
uctu
re
Capital
SocialAngels
SocialVC
“PRI”Debt
PublicMarket SRI
LandscapeDefinition
Evaluation/Certification
Transactional(e.g. Funds)
ExchangePlatform
CalvertPhilanthropicAssets/DAF
AA1000
GRI
RSF Social Finance
Local Exchange
NFF Capital
Partners
Investors’Circle
Aspen Institute
Domini SocialInvestmentsUnderdog
Chicago ClimateExchange
B Lab
Good Capital
SouthShore Bank
Calvert Special Equities - CF CI Notes - Calvert Mutual Funds
New Schools
Xigi.net
BOVESPASocial
Stock Exchange
UK SocialStock Exchange
Fourth Sector Network
Origo
NFFLendingAcumen Fund
Patient CapitalCollaborative Generation
Investments
GenerationFoundation
Ashoka
Deutsche Eye Fund
© Jay Coen Gilbert, Don Shaffer and John Katovich
More intermediaries a sign of new money in the Blended Value Market
Source: GoodCaptial Story Index Presentation and Jay Coen Gilbert, Don Shaffer and John Katovich
Financial Entities- managing other’s money
Capital Flow
SOURCE ->
ORGANIZATION ->
USE ->
Government OrganizationsIndividuals
OperationsPrograms
Assets
INVESTTAX
DIRECT
CAUSEWAY: a national collaboration
Requirements
Return
Sour
ce P
ersp
ectiv
e Use Perspective
Constructive Dynamic
Constrictive Dynamic
Risk
Restric
tions
It begins with a conversation…• Aligning interests to create innovative solutions
CAUSEWAY: a national collaboration
… results in specific products• Venture capital
– Capital regional et coopérative Desjardins (CRCD) is a $500 million venture capital fund created in 2001 by the Desjardins Movement with the help of a provincial tax credit. Individual investors can invest up to $3500 a year in shares with a 50% tax credit. Shares must be kept for a minimum of seven years. Mission: to provide capital, expertise and access to networks for businesses and cooperatives in all Québec’s regions
• Local community development– The Columbus Foundation used $2 million to seed an $18 million low-cost housing fund to build
1,600 new units of affordable housing. • Startup or expansion capital in underserved communities
– Deutsche Bank announced it will create an innovative $20 million investment fund to finance the expansion of eye care hospitals in developing countries. The Eye Fund I will provide loans and guarantees to support the development of affordable, sustainable and accessible eye care for the world's poor while providing a near-market return for investors
• Debt mechanisms– Milestone achievement of $100m in loans to community finance institutions and social
enterprises by Calvert Foundation’s Community Investment Note• Acquisition of assets
– BC Pension Funds – 21 BC-based union and management pension funds pooled $27 M to form Concert Properties in 1989 (originally named VLC) with the objective of financing affordable rental housing in BC, and creating jobs in the unionized construction industry. Today the 100% pension plan owned real estate corporation has $800 million in assets, with a track record of creating 10 million hours of on-site employment for unionized construction workers.
CAUSEWAY: a national collaboration
… and can change whole systems.• Coming together of the great catalysts
–capital + community• Great Bear Rainforest (2 million hectares)
–Start: environmentalists + lumber companies get together–2001: private foundations + BC premier’s office -> 1st nat.–2002/3: determination of ecological value and economic pot.–2007 Outcomes:
• $120 M across 2 funds: $30 M fed, $30 M prov., $60 M private• Provincial government actions
– New ‘ecosystem based’ land management regime (3x PEI)– New park designation for ecological protection
• Collaborations– Collective land-use agreement among prov. gov’t and first nations– North coast first nations collaborating (e.g. joint marketing and distribution of fish)– Shared governance between private, first nations, government
http://www.conservative.ca/EN/1091/105904
Could mobilize > $100B
Micro Finance
MONITOR INSTITUTE 21
The Future ofSocial Capital Markets
Katherine FultonOctober 2008
MONITOR INSTITUTE 22
All Investing$61.90 Trillion
Negatively Screened Funds + Impact Investing$2.71 Trillion
How Big Could it Be?
Impact Investing in 5–10 years?
U.S. Philanthropy$0.31 Trillion
Impact Investing has the potential to grow to ~1% of total managed assets, which could result in ~$600B of capital
channeled towards social and environmental impact
MONITOR INSTITUTE 23
A convergence of actions
Create industry defining funds as a beacon for how to address specific
social issue(s)
Place substantial catalytic, risk-taking capital in mezzanine finance structures
Develop impact investing network
Set the industry standards for social measurement
Lobby for specific policy / regulatory change
CoordinatedLeadership
THAT’S HOW IT COULD TAKE OFF
Canadian Context
• Limiting regulatory framework
• Income Tax Act and charity law significantly constrain flow of capital
• Strong non-profit sector
• $120 B annual expenditures• >7% of Canada’s GDP• Above average growth• 1.5 M workers + 0.5 M volunteers• 2nd largest in world per capita
• Internationally significant
• Resources• Water, energy, forests
• Examples• Great Bear Rainforest
Non-profit income sources
Individual Donations
8%
Gifts5%
Earned Income
35%
Government49%
Corporations
3%
Design Breakouts
Approach
• A change in conversation• A change in flow
Application
• Investments• Products• Systems
Get Involved
www.SocialFinance.ca
Social Finance WorkshopMichael Lewkowitz
Karim HarjiAndrew Dilts